The Train To Dubai
The multi-nation, multi-modal economic corridor connecting India to Europe through the Middle East is a potential force multiplier. EPISODE #143
Dear Reader,
A very Happy Monday to you.
Little over a week ago, India, Saudi Arabia, United Arab Emirates, Jordan, Israel and the European Union inked an agreement for an economic corridor connecting India with Europe through the Middle East. This deal co-authored by the United States and India was clinched on the sidelines of the G20 summit meeting in New Delhi.
Once up and running it has the potential to be a force multiplier in a region, which coincidentally, excluding Europe, accounts for the fastest growing economies in the world. So, this week I explore this very powerful idea, which in many ways is tracing the historic trade routes connecting India to Europe.
A big shoutout to Balesh, Ajeet, Premasundaran, Aashish, Gautam, and Vandana for your informed responses, kind appreciation and amplification of last week’s column. Once again, grateful for the conversation initiated by all you readers. Gratitude also to all those who responded on Twitter and Linkedin.
The cover picture is of the leaders of Saudi Arabia, United States and India at the event to launch the economic corridor. It is sourced from Press Information Bureau.
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New Trade Dynamics
On 20 June, Prime Minister Narendra Modi embarked for the United States to hold parleys with his counterpart, US President Joe Biden. On the way back, ahead of concluding his visit on 25 June, PM Modi visited Egypt where he received the highest civilian award, “Order of the Nile”.
A month later, 13 July, PM Modi flew to France for another bilateral visit, where he was conferred with the Grand Cross of the Legion of Honour, their highest civilian and military honour, by French President Emmanuel Macron.
On the way back to India, he stopped over in the United Arab Emirates (UAE)—the fifth time PM Modi was visiting the country in eight years. Further, India inked a Free Trade Agreement with the UAE last year.
Remember Modi was the first Indian PM to visit the UAE in 34 years in 2015. Bizarre, given the significance of the Middle East in India’s strategic math as well as the fact that the UAE is India’s second largest trading partner.
Preceding all this was the creation of an institutional framework. The Abraham Accords laid the foundation for a new relationship in the Middle East, nudging the Arab nations closer to a relationship with Israel.
This was followed by the establishment of the I2U2 grouping of India, Israel, UAE and the United States. It aimed to create a synergy between the member countries to jointly address global challenges, especially with respect to fostering investments in water, energy, transportation, space, health, and food security.
Connect the dots. Did the penny drop? It did on 10 September.
On the sidelines of the summit meeting of the G20 group of countries in New Delhi: India, Saudi Arabia, United Arab Emirates, Jordan, Israel, Italy, France and the European Union inked an agreement with the blessings of the United States to set up an economic corridor connecting India with Europe through the Middle East. It promises to be unlike anything the world has seen so far.
Clearly PM Modi’s jet setting ahead of 10 September was all about tying up the ends ahead of the big announcement in Delhi—while Saudi Arabia was a state guest of India, the UAE was a special invitee to the G20 summit.
The special recognition the PM received during his visits was an acknowledgement of the growing bond between India and these countries. The economic corridor is perfect glue to further strengthen these bonds.
I am sharing below an explainer from StratNews Global, which includes a lovely animation capturing the proposed economic corridor.
Check it out as it will answer basic questions that would have cropped up in your mind.
The economic corridor connecting India to Europe through the Middle East is a deal in which every country is a stakeholder—bringing something to the table. As a result, the sum of the parts is greater than the whole.
A win-win for all.
The Deal
As I said in the introduction, the corridor once up and running holds the promise of being a force multiplier for the entire region—coincidentally, the Middle East oil producing nations flush with oil surpluses estimated at around $4 trillion, and India, are the fastest growing countries in the world.
The economic corridor is a futuristic plan that is overflowing with ambition. Already, the Middle East and India are working to address mutual interests—food security for the former and energy security for the latter. It builds on newly forged relationships. The India-UAE Comprehensive Economic Partnership Agreement, logged its first anniversary a few months ago; a food corridor connecting the Middle East and India has been underway for the last three years.
Ursula von der Leyen, President of the European Commission, who was present on the dias was unambiguous in her assessment of the prospects of the new economic corridor:
“This (economic corridor) is nothing but historic.
It will be the most direct connection to date between India the Arabian Gulf and Europe with a rail link that will make trade between India and Europe 40% faster.”
And then added:
“..create business opportunities all along the way.
These are state of the art connections for the world of tomorrow. Faster, shorter, cleaner.
This corridor is much more than just a railway or cable. It is a green and Digital Bridge across continents and civilizations.”
The initial response to the deal in some quarters has been to question the audacious ambition of the project and to stack it against the Belt and Road Initiative (BRI)—a project sponsored by China to promote its mercantile interests.
While the former is something that will be known to us only in the future, the latter comparison is way off the mark. What China has strung together, undoubtedly impressive, is nothing but a mercantilist agenda. Worse, it has pushed several partner countries into a debt trap—Sri Lanka for example, had to sign off its deep sea Hambantota port to Beijing for a 99-year lease because it could not repay Chinese loans it took out to build the port.
On the other hand, the India-Middle East—Europe Corridor (IMEEC) is a very futuristic idea that builds on the new diplomatic buzzword, friendshoring—a trade practice wherein supply chain networks are strung across countries considered to be political and economic allies. This idea gained currency in the aftermath of the falling out between China—at one time, the factory of the world—and the United States.
As the statement claims, the deal broadly seeks to:
Link commercial hubs across continents;
To facilitate the development and export of clean energy; lay undersea cables and link energy grids and telecommunication lines to expand reliable access to electricity;
Enable innovation of advanced clean energy technology; and connect communities to secure and stable Internet;
Drive existing trade and manufacturing and strengthening food security and supply chains;
Unlock new investments from partners, including the private sector, and spur the creation of quality jobs.
The economic corridor—built on the foundation of friendshoring—is actually a forerunner of similar agreements in the future. The idea is to create reliable supply chains by making everyone a stakeholder. Effectively, the era of one country being the sole source has ended.
The European Commission President said as much. In her address on 10 September in New Delhi she shared details of another deal—this time in Africa.
The President said:
“The trans-African corridor which will connect the port of Lobito in Angola, with the Katanga province in the Democratic Republic of Congo and the copper belt in Zambia.
Our goal is not only to connect a landlocked region to the sea. Our partnership will also invest in local value chains in clean energy and in skills for the local workforce.
It is a whole new approach to large infrastructure investment. It is about shared prosperity.
It is about real benefits for all partners.”
Nothing talks like money. The economic corridors are shaping the new contours of global diplomacy. One in which middle powers like India, Brazil, South Africa, Saudi Arabia, Indonesia, UAE will be in the spotlight.
India the Catalyst
As I wrote last week, India too has undertaken a key pivot to make it possible to be part of this new framework. One about ‘give and take’. It has abandoned the zero-sum game that defined its diplomacy previously.
As a result it is now helping shape the narrative in alliance with other middle powers and the United States as an anchor. It is still a distance from setting the narrative. This is not to undermine the impressive diplomatic achievements India has managed in the last few years.
Writing in Mint, Harsh Pant, Professor of International Relations, King's India Institute, explained this makeover brilliantly.
“The revival of global institutions depends on how key stakeholders, especially major powers, relate to each other as the balance of power evolves rapidly.
India as a middle power can only try to push for greater dynamism by reminding the world that existing global institutions are not at all representative of the emerging world order.”
And then added:
“India’s global outreach to old and new stakeholders from Africa to the Middle East, on ample display at the G20, is the final trend shaping New Delhi’s foreign policy aspirations.
….Its success at the G20 summit is less about its role in the multilateral order, and more about how it is trying to pursue its national objectives without the ideological baggage of the past.”
Recent developments only reaffirm that the global order is witnessing a reset. One in which middle powers will be very influential. The economic corridor connecting India to Europe through the Middle East is an excellent example of this.
The mantra is prosperity for all.
Recommended Viewing/Reading
Sharing my latest post of Capital Calculus on StratNews Global.
Little over a week ago, India hosted the summit meeting of the G20 group of countries in New Delhi. Undoubtedly, the outcome, though unexpected, was fantastic. Both from the world and India’s point of view as it generated consensus on the way forward for a very divided world.
One point of unanimity was the decision to adopt India’s pioneering open digital economy framework—or as we know it as the India Stack made up of Digital Public Goods (DPGs)—as the global standard.
It is a huge leg-up for the India way of leveraging DPGs to leapfrog development—for example, banking 509 million people in just nine years, using Aadhaar.
To unpack this and more we spoke to Rahul Matthan, a partner at Trilegal. Rahul is someone who has been closely associated with the evolution of India’s DPG framework and hence in a vantage position to weigh in on the developments.
Till we meet again next week, stay safe.
Thanks for another informative post. However, a few points are in order. 1- There is no train to Dubai, even if figuratively but a shipload to Fujairah port! 2. India has nothing much to do as our ports on the Wester coast are ready to ship. Similarly, Ethihad Rail and Saudi Rail network is mostly done except around Jordan side. So IMEC is essentially a strategic initiative ( as it brings us closer to Gulf and Levant countries) and can benefit India if we get contract for various rail construction projects. 3. IMEC can be used by China or Pakistan or by anyone for shipment. So it helps China as well in good times! OF course, CPEC was never a viable or sensible project if China wanted to ship good from Gwadar to mainland China. But IMEC de-risks Suez canal route and is a visionary step. Similarly, Chabhar is not affected as it is meant for trade across Iran to Central Asia to Eastern side of Europe. 4. So Modi must be credited for this work. In fact, Modi deserves Nobel Peace Prize for his work during last few years, including Covid times, G 20, Ukraine war, Uri-Balakot-Dhoklam-Galwan etc. Why no one is talking about it?
Dear Anil,
Very interesting and informative article on this ambitious project!! The 300 km corridor will surely help to boost trade , transport, energy resources and improve digital connectivity.Also it will be an alternate supply chain in the post pandemic world order.